Syntax
GEOMEAN(value1, [value2, ...])
| Parameter | Description |
|---|---|
| value1 | Parameter of the GEOMEAN function. |
| [value2 | (Optional.) Parameter of the GEOMEAN function. |
| ...] | Parameter of the GEOMEAN function. |
Examples
Average annual return
Formula
=GEOMEAN(1.08, 1.12, 0.95, 1.20, 1.05) - 1
Converts returns (8%, 12%, -5%, 20%, 5%) to growth factors, takes the geometric mean, and subtracts 1 to get the true average annual return of ~7.7%.
Average growth rate
Formula
=GEOMEAN(B2:B11)
If B2:B11 contains 10 years of growth factors (like 1.05 for 5% growth), returns the average compound growth factor.
Normalized comparison
Formula
=GEOMEAN(C2:C100)
Returns the geometric mean of 99 positive values. Always less than or equal to the arithmetic mean.
Common Errors
#NUM!
Returned when any value is zero or negative. The geometric mean is only defined for strictly positive numbers.
#VALUE!
Non-numeric arguments were provided.
Tips
Always use growth factors, not percentages
Convert percentages to growth factors first: 5% becomes 1.05, -3% becomes 0.97. Then subtract 1 from the GEOMEAN result to get back to a percentage.
No zeros or negatives allowed
GEOMEAN requires all positive values. If you have a year with -10% return, express it as 0.90 (the growth factor), not -0.10.
More accurate than AVERAGE for returns
Arithmetic average overstates compound returns. If an investment gains 100% then loses 50%, the arithmetic average is +25% but the geometric mean correctly shows 0% (you're back where you started).
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